If you have student loans like so many other Missouri residents do, then you are probably familiar with the term “deferment,” which allows you to postpone your loan payments for a specified period. Did you know that the IRS has a similar option? Of course, the criteria for receiving a deferral from paying your taxes are much more stringent than it is for your student loans.
You will need to show that you have no money left, or very little money left, after you pay for your necessities such as food, rent and utilities. This requires you to provide a significant amount of documentation regarding your financial situation to the IRS. You will also need to file all of your tax returns and fill out the required forms before you can proceed.
If the deferral is granted, your taxes go into what the IRS calls “currently not collectible” status. You will not be asked to enter into an installment agreement, and the agency will stop any collection efforts while you remain in this status. During this time, interest and penalties may continue to accrue, which will increase the total amount you owe when you do need to begin paying on your tax debt again, which happens when your financial situation improves to the point where the agency decides you can once again begin paying.
If you do owe the IRS, but have no way to pay your tax debt, it would be a mistake not to try to work something out with the agency. Otherwise, you could find yourself facing wage garnishments, bank levies and other aggressive collection efforts in order to secure payment. Applying for a deferral could provide you with the time you need in order to get back on your feet financially. Fortunately, you can make use of legal resources here in Missouri to help you achieve the result you need.
Source: thebalance.com, “IRS Status: Currently Not Collectible“, William Perez, Accessed on April 25, 2018